1200 jobs lost, but rates tipped to stay

"We think the RBA will hold off because of the global backdrop" ... Hans Kunnen, chief economist of St George. Photo: Michel OSullivan

Nearly 1200 jobs have been axed in recent days as some of Australia's best-known companies adjust to the weakening economy.

The cuts come as economists await the release of critical jobless figures on Thursday which are expected to show a lift in the unemployment rate.

But economists say the rise in unemployment is unlikely to convince the Reserve Bank to cut rates when it meets next month.

Building products maker Boral on Wednesday outlined plans to cut 700 office jobs, as part of efforts by the company to ''right-size the business'' to fit the struggling local construction sector.

One-third of the job cuts would come from NSW, the chief executive, Mike Kane, said, while Victoria and Queensland would account for a further 20 per cent.

Former RBA board member Warwick McKibbin said instead of monetary policy, the federal government needed to use taxation more effectively to help to improve productivity by reducing costs.

''The issue is really an issue on the fiscal side, rather than on the monetary side. And you don't solve a fiscal mistake by making a monetary mistake,'' he said.

The news came just days after BlueScope Steel announced plans to sack 170 workers in coming months as it moved to reconfigure its steel production plant at Hastings, east of Melbourne.

Also on Wednesday, Vodafone said it planned to close its Crazy John's chain of mobile phone stores by late February, in a move that will affect up to 300 jobs.

It is understood about 40 of 60 stores could be closed, with the remaining stores to be rebranded into Vodafone stores.

The wave of job losses comes as housing finance figures this week showed a 0.5 per cent decline in the number of home loans in November, and as the ANZ job ads series fell 3.8 per cent in December, the tenth-consecutive month of declines.

The St George chief economist, Hans Kunnen, said any rise in unemployment figures on Thursday is still unlikely to convince the Reserve Bank to cut rates when it next meets in February. Economists are tipping jobless numbers to lift to 5.4 per cent, from 5.2 per cent.

''We think the RBA will hold off because of the global backdrop, there's less nervousness about Europe and America,'' he said.

''The RBA will be waiting to see the full impact of its previous cuts … [but] they will possibly be disappointed with the next lot of jobs figures and come April, we think they will move again [by cutting 25 basis points].''

However, Mr McKibbin said he did not think the central bank should cut rates again.

''All cutting rates will do is lead to a misallocation of capital within the economy,'' he said.

The acting Employment Minister, Kate Ellis, said the federal government was poised to announce its response to the manufacturing taskforce report.